The retail equity Arvind Fashions has recently garnered significant attention from investors due to its outstanding performance. Over the past year, this stock has experienced a remarkable appreciation, boasting an increase of more than 81%. In 2024 alone, it has seen a rise of nearly 46%, managing to deliver positive returns in six out of the ten months thus far.
As of October, Arvind Fashions has recorded a 1% increase, marking a continuation of gains for the stock for a third consecutive month. In September, it surged by over 11%, while August saw a 4% uptick. Prior to these months, the stock displayed some volatility, having declined by 1% in July after a substantial rise of over 17% in June. Notably, May recorded an 8.5% decrease, following a 6% gain in April. The stock also saw corrections of 1% and 12.3% in March and February, respectively, though it rebounded significantly with over a 27% rise in January.
This small-cap stock recently achieved a 52-week high of ₹622.95 last month and is currently just 4% shy of this peak. Impressively, it has surged nearly 100% from its 52-week low of ₹299.15, which was recorded a year ago in October.
With substantial gains like these, investors are left pondering whether this upward trend will continue. Below, we delve into insights from experts regarding the stock’s technical and fundamental outlook.
Technical Analysis by Gaurav Bissa, VP, InCred Equities
Arvind Fashions has been consistently forming higher highs and higher lows on weekly charts, a clear indication of a sustained uptrend. It has respected key support levels in the Williams Alligator index, demonstrating multiple bounces. Currently, the setup suggests that fresh buying may not be advisable, as indicators like the RSI are nearing resistance levels. A potential price move towards ₹530-₹540 could present an attractive opportunity to accumulate shares for the long term. A closing price above ₹73 on the weekly chart could drive the RSI toward 80-82, potentially propelling the stock price significantly higher. Existing investors are encouraged to hold onto their shares as the established uptrend remains solid.
Technical Insights by Rajesh Palviya, SVP – Technical and Derivatives Research, Axis Securities
The stock is in a robust uptrend, characterized by an ongoing pattern of higher tops and bottoms, signaling strong upward momentum. It has recently regained its 20-day and 50-day Simple Moving Averages (SMA), indicating a beneficial rebound and confirming buying pressure at established support zones. The stock has definitively surpassed the multi-month resistance level of ₹544, highlighting bullish market sentiment. The increasing volumes observed over the past four months suggest heightened investor participation in this rally. With daily, weekly, and monthly RSI indicators solidly positioned in the positive zone, the stock shows continuing strength across all time frames. The immediate support area is anticipated to be around ₹545-₹540, and projections indicate that this momentum may drive the stock towards ₹645-₹685 in the upcoming months.
Fundamental Analysis
Sunidhi Institutional Research has initiated coverage on Arvind Fashions with a buy recommendation and a target price of ₹945, suggesting an upside potential of over 58% in the next two years.
Arvind Fashions has firmly established itself in India’s high-street fashion landscape, marking a successful trajectory thus far. The company’s brands are performing exceptionally well, and it’s expected to replicate this success across its broader portfolio, forecasting a 15% compound annual growth rate (CAGR) in the retail segment over the next 2-3 years. With the current market price at ₹550, the stock is trading at a price-to-earnings multiple (PEM) of 117x, aligned with its FY24 adjusted earnings per share (EPS) of ₹4.71, which is consistent with retail sector peers. As the company embarks on a profitable growth journey beginning in FY23, strategic investments for a two-year perspective towards a price objective of ₹945, factoring in a 50x FY27E EPS of ₹18.9, are highly recommended.
With over 30 years of retail experience, Arvind Fashions stands as one of India’s leading lifestyle companies, boasting a diverse portfolio of renowned brands. The company has been keenly focused on expanding its physical presence to fortify its brand array. In light of India’s rising per capita income, the firm is exceptionally positioned to capitalize on the burgeoning middle class and the casualization trend in fashion. Projections indicate a revenue, EBITDA, and PAT CAGR of 13%, 21%, and 50% respectively for FY24-27, underlining its growth potential.
Disclaimer: The opinions and recommendations expressed in this article are those of individual analysts or brokerage firms, and do not necessarily reflect the views of any financial institution. Investors are advised to consult with certified experts before making any investment decisions.
